FX.co ★ jerome82 | EUR/JPY

Trend Following and Pullback Strategy on EURJPY H1

Based on price movements on the H1 timeframe, the EURJPY pair shows a relatively clear trend tendency with a downward phase followed by potential reversal or consolidation towards the end of the period. The average lines (likely fast and slow moving averages) show dynamics of momentum changes that can be utilized for trend-based trading strategies and pullbacks. The main strategy that can be applied is trend following with pullback confirmation. When the price is below the longer moving average (blue line), it indicates that the bearish trend is still dominant. However, when the price starts to approach or touch that moving average after a downward phase, this condition often becomes an opportunity for a measured risk sell entry. Pullbacks like this can be seen several times on the chart, where the price rises temporarily before continuing the decline. Conversely, towards the end of the chart, there are indications of a change in direction, marked by price movements starting to break above the moving average and the average lines flattening or potentially reversing direction. This opens up a second strategy opportunity, which is an early reversal entry. Traders can look for additional confirmation such as strong bullish candles or a breakout from minor resistance before taking a buy position. The horizontal levels marked (around 186.63, 186.78, 187.14, up to 187.38) serve as important support and resistance areas. An effective strategy is to wait for price reactions in those areas. If the price fails to break through resistance and shows rejection, then the sell opportunity remains valid. Conversely, if there is a breakout accompanied by strong volume or momentum, then a breakout buy strategy can be considered. Risk management is key in this strategy. Stop loss should be placed slightly above resistance for sell positions, or below support for buy positions. The profit target can use a minimum 1:2 risk-reward ratio to remain consistent in the long term. Furthermore, it is important to pay attention to the overall market structure. As long as the price continues to form lower highs and lower lows, the bias remains bearish. However, if the structure starts to change to higher lows and higher highs, then traders should start shifting to a bullish bias. In conclusion, the combination of trend following and pullback provides a flexible approach in analyzing the movement of EURJPY H1. With discipline in signal confirmation, the use of key levels, and good risk management, this strategy can help increase the probability of consistent trading success.